Jean K. Hunter, director of investor relations for Conoco Inc., remembers the day when she realized that the Internet had changed her business for good. Conoco executives had decided not to mail out 10-K forms-a standard practice for an IR department-because they were so easily available over the Internet. The measure was a big cost-saver for the company, but no one was sure how investors would react. Sure enough, a huge institutional investor-"a real 800-pound gorilla," Hunter remembers-called to ask when he would receive a 10-K. Hunter told him about their plan, that investors could look up the information themselves at the Edgar-Online site. She waited for his reaction. "Oh," the investor responded. "Well, we're big boys. We can do that." "I knew then that we were over the hump," Hunter says with a laugh. "If this big investor didn't need us to send the form, then we were okay." Teresa Clifford, who manages e-communications for BP's government and public affairs departments in London, also can pinpoint the moment when executives at her company latched on to the power of the web. It was the day that BP announced its merger with Amoco. The IR and public relations departments had all of the merger information ready to post at BP's Internet site the instant the deal was revealed. And it's a good thing. Within five minutes, traffic on the site leapt 50-fold. "What we learned is that if you don't do it in the first five minutes, you've lost an audience that has come straight to you," says Clifford. "When [the news] hit the wires, you could see the leap [in web-site traffic]. I think that really concentrated people's minds on the importance of this, and IR became one of the big sponsors of the web." Simply put, the Internet is revolutionizing the practice of investor relations. People are turning to the web in droves to find out everything from "What's your stock price?" to "What's your business strategy in Venezuela?" And those people include everyone from the business-suited sell-side analyst who's crunching numbers all day to the pajama-clad web junkie who is surfing the Net at midnight. What's more, the U.S. Securities and Exchange Commission wants corporations to treat these myriad investors as equals, and it has recently approved a new rule that requires management to disseminate material information to all shareholders and analysts at the same time. At press time, IR professionals were trying to determine how best to comply with the SEC's new rule, Regulation Fair Disclosure, which was to take effect October 23. However, it's clear that the Internet and its global reach will play a key role in pulling all investors into the information loop. "I think Regulation FD has sent the wake-up call to a lot of companies," says Howard Christensen, president of Christensen & Associates, an IR consulting firm. "They're saying, 'Wait a minute. We've got to reexamine what we've been doing all these years. And if we really want to communicate with the financial community, we're going to have to pay attention to all of the channels of communication, and that includes the Internet." One of the great advantages of the Internet is that there's practically unlimited space in which to post all sorts of information about a company. But many firms aren't using that space in the best way, Christensen says. It's great to post a lot of information on a corporate web site, but if it's not packaged properly, it may bore, confuse or frustrate investors. "What [many] companies have done is merely throw their information up on their site," observes Christensen. "They'll take a 50-page annual report and put it on their web site. It's a static document because it doesn't change. A web site needs to be dynamic. It needs to be changing. It needs to be quick. It needs to be entertaining." And, it needs to provide accurate information, as well as the company's message. A pretty tall order. So how does a corporate IR department provide enough information for an analyst or an institutional investor without alienating people who are just surfing for investment ideas? One technique Christensen advocates is to post a quick overview of the company, its investment characteristics and its unique positioning. This provides a good introduction to the company; those who want more details can drill deeper into the site. Also, in addition to posting video and/or audio-only of lengthy meetings or analyst calls, companies should post a short summary of the tape or an index that includes time of delivery. The viewer can choose how much information he or she wants to receive. All this is designed to save time. "Frankly, would you listen to a presentation on a company for two hours?" he asks. "It's pretty boring to listen to a presentation that was designed for a sell-side analyst if you are a generalist portfolio manager, a retail broker or a high-net-worth individual. Maybe you will get a few tidbits of knowledge, but it's buried among a whole lot of data." The basic goal is to give people exactly the information they need to make an intelligent decision on your securities. "I saw a presentation on a site the other day that had [links to] a speech, the written text and some outlined bullet points," he says. "You had your choice to listen, read or skim through the supporting graphics. That's absolutely perfect." This may sound easy, but it requires the kind of focus that may be difficult for executives to muster. When living and breathing your company's story every day, it's a challenge to boil it down to the bare essentials. Management needs to understand the value drivers of their stock, Christensen says. And many times, the nonfinancial drivers are equal to or more important than the numbers. "I'll ask a CEO, 'Why would I be interested in buying your stock?'" Christensen says. "They may give me 15 or 20 reasons, hoping to hit on one that would interest me. Really for the executive, it becomes a matter of focus on the right message that will have investment appeal and create the desired image. The web site is no more than a very intense communication delivery system. Companies must learn to deliver the right message." And, thanks to Regulation FD, the method of delivery can be just as important as the message. Many more companies are expected to webcast their conference calls in an effort to disseminate information to a broader audience. According to a recent survey by the National Investor Relations Institute, 61% of the companies polled are currently webcasting corporate conference calls, and another 22% plan to implement this within the next year. Six months ago, 48% were webcasting. Michael Noonan, senior vice president, investor relations, for Pierpont Communications, says that "push" e-mail technology is going to be a vital way to inform people of when these webcasts and calls will be conducted. In other words, web-site site users can register to receive information via e-mail, and they will be notified electronically if the contents on the site change, or if new events are put on the calendar. "This is increasingly important from a regulations point-of-view," Noonan says. "These conference calls and webcasts can be used for full disclosure once everybody is invited. It's important to announce conference calls widely, meaning push e-mail capacity becomes more important." Large- and small-energy-company IR executives grapple with all these daily. At BP, a staff of four works on the BP.com site full-time, Clifford says. The site has developed some interesting features, as BP's investor base has changed with its acquisition of U.S.-based companies Amoco, Arco and Vastar Resources. "A very web-literate U.S. audience made it much more possible for us to do more things," Clifford says. "The main thing was to break the mold a little bit and start laying the groundwork for a more personal service to the investor." BP's online investor center went through a major revamp in March 2000, sporting a new look and a new product called BP Alive. The purpose of BP Alive is to provide information on the financial, social and environmental activities of the company in one place. Investors can find the latest quarterly results, live webcasts of analyst presentations, and five years' worth of financial operating data that can be downloaded into spreadsheet programs and integrated into analyst models. There are also interactive tools. A share calculator allows a stockholder to type in the number of shares held and find out what they are worth on that day. Historical share prices can be graphed against the prices of BP's peers. Shares can be purchased online, and at annual meeting time, stockholders can vote by proxy through the site. The most popular service, Clifford says, is probably the question-and-answer feature with BP chief executive John Browne. Site users submitted questions; Browne answered one a day for 100 days. "We're just beginning to talk now about where we go from here," Clifford says. "There are no firm decisions, but we want to move as much as we legally can to real-time reporting, to give a very up-to-date picture of the company and what it's doing." At Southwestern Energy Co., executives began re-creation of the entire IR program in mid-1998, looking for a more proactive relationship with analysts and potential investors, says Greg Kerley, executive vice president and chief financial officer. Part of that effort included developing a web site, which went live in March 1999. "We face the same challenge we've always had-differentiating ourselves from other potential investments, in oil and gas and in other sectors," Kerley says. "We have to be proactive and make sure our web site reflects why one should invest in Southwestern Energy." In addition to basic company information, Fayetteville, Arkansas-based Southwestern Energy's web site provides a history of its insider trading activities, live and playback teleconferences, and a direct investing program. Patterns indicate that the investing program is a popular feature, Kerley says. Of the 800-plus hits a day, many come through AOL or Yahoo! accounts, and 90% are when U.S. stock markets are open. "I know some access relates to stock trading," Kerley says. The ease and ever-growing popularity of the Internet has led Southwestern Energy to cut back on the distribution of printed materials. Last year, executives decided to make quarterly reports available only on the Internet. Press releases are also on the Internet, with hard copies available by request. It's not always easy to know what features on a site will strike a chord with web surfers. Says Kerley, "I don't know how many people I've talked to who have said, 'I saw your picture. I pulled you up [on the web site] to look at you. I wanted to know who I was talking to before I called." At Conoco, the IR department was originated with the Internet in mind. The company was spun off from DuPont in 1998 and had to formulate its own IR strategy. The advantage, says Hunter, is that there was no ingrained mindset in place, so executives were willing to try some innovation with the Conoco web site. "When Conoco was part of DuPont, we had no separate annual report, but we had a glossy supplement called Conoco Highlights. With our own annual, what's left of that supplement is lots of stats, nothing but numbers, 12 pages of tables," Hunter says. "Now, that's on the Internet. Not everyone is interested in it, but from an analyst perspective, it's great because it can be downloaded into spreadsheets." Conoco adopted an abbreviated form of its quarterly conference call this year, posting much of the quarterly earnings information solely on the Internet. Instead of reading the results, executives devoted the call to operational highlights, clarifying more complex points, and answering questions. "The analysts are so tight for time," Hunter says. "They just loved it." Analysts interviewed by Oil and Gas Investor said it's important for a corporate web site to be up-to-date. They also give thumbs up to data that can be downloaded into Microsoft Excel or other spreadsheet programs. And they are likely to visit the site more often if it includes related industry information from third parties, such as the Baker Hughes rig count. They gather financial data from a variety of Internet sources, from the SEC's online archives to Yahoo!. What makes a corporate web site especially useful is the unique information it includes about the company's operations and history, they say. "I look much more for information regarding the company's drilling activities, prospects and timing of drilling, and to get a sense of what management is thinking about their exploration program and so forth," says Greg McMichael, who covers small-cap E&P companies for A.G. Edwards & Sons Inc. in Denver. "Those are the things I look for on the web site." Noonan, of Pierpont, suggests that companies post an operations update at lease once a week for maximum effect. "There are obviously competitive issues here, but the landscape now is getting to the point that if you don't provide something a little different from somebody else, you're going to lose interest. So I think it's important to have some kind of production or manufacturing or service information up there, and very few corporations are doing that right now." NET NECESSITIES When it comes to posting information on the Internet, the possibilities are literally endless. The following are the minimum features that are required for a good corporate web site, according to Lisa Elliott, vice president of Easterly Investor Relations in Houston. • Corporate profile, including a description of the company, its reserves and production data, its operating strategy, and a list of managers and directors, along with bios and photographs of each. • News section, including press releases and recent events. • Investor relations section, including contacts in the company's internal IR department, any outside agencies and the transfer agent. This section should also include news releases, the company's stock price and a price chart, a stock-purchase program if applicable, dividend data, a calendar of events, presentations/speeches, conference-call audio, and answers to frequently asked questions. This section should also allow users to register to receive more information or news. • Financial reporting section, including annual and quarterly reports as well as SEC filings. • A glossary of terms. • A legal disclaimer. • Descriptions of fields, properties and areas of operations. Howard Christensen, president of Christensen & Associates, an IR consulting firm, classifies web-site content into basic, intermediate and advanced categories. • Basic: annual reports, company background, financial releases, SEC filings, stock charting, stock quote, contact information and form for requesting information. • Intermediate: a calendar of events, frequently asked questions, list of analysts who cover the company, management bios, fundamentals data and consensus earnings. • Advanced: annual meeting presentations and materials, Power Point presentations, supplemental analyst financials, video clips, webcast archives and e-mail alerts.